The Facts
Daughter, son-in-law and mother live together in rented house in town
A mother, daughter and son-in-law lived together in a house they rented in town.
However, they all agreed that in order for the daughter and son-in-law to provide accommodation and care properly for the mother, they would need a larger house.
To achieve this objective, they signed a deed of family arrangement.
Deed specifies benefits to mother in exchange for financial contribution
The deed required the daughter and son-in-law to purchase a specified property in the town “or some other suitable accommodation”. They would also allow the mother to live with them.
The deed also required them to take care of the mother’s needs and to fund her transition to an aged person’s unit or care facility when necessary.
The mother agreed to provide her life savings of $220,000 to the daughter and son-in-law to assist with the purchase of the specified property, which was priced at $470,000.
In December 2011 the daughter and son-in-law completed the purchase of the property and moved into it with the mother.
Relocation out of town leads to mother demanding return of money
A few years later, the daughter and son-in-law informed the mother that they were selling the house in town and buying a more expensive house 25 kilometres outside of town.
In doing so they took out a large new bank loan.
The mother moved with them to the new house.
However, a short time later she moved out and demanded the return of the $220,000.
The daughter and son-in-law refused, asserting that the mother had agreed to the move.
Mother unsuccessfully seeks remedy in Supreme Court and lodges appeal
The mother filed a statement of claim with the Supreme Court of NSW, seeking the return of her $220,000 gift.
The Supreme Court rejected her claim, and she appealed to the NSW Court of Appeal.
Expert commentary on the court's decision
Court rejects mother’s appeal
In the NSW Court of Appeal Supreme Court case Richardson v Lindsay [2019] NSWCA 148, the court rejected the claim made by the mother, Ms Richardson.
The appeals court agreed with the primary judge that Ms Richardson had consented to her daughter and son-in-law, Mr and Mrs Lindsay, buying the property in Lewis Ponds, 25 kilometres outside of Orange.
Further, the Lindsays had relied to their detriment on Ms Richardson’s consent, and it would be unconscionable for Ms Richardson to be allowed to go back on that promise of consent.
Law of estoppel – being restrained from breaking a promise
“Estoppel” is a legal concept most easily understood as “a party being restrained by a court from breaking a promise” not to rely on their strict legal rights.
For an estoppel to be found, there must be an assurance or promise made by party A to party B not to rely on their strict legal rights, and reliance on that assurance or promise by party B. Party B must demonstrate that they have suffered detriment as a result of that reliance, and that it would be unconscionable to allow party A to go back on their promise.
Deed requires house to be located in Orange, but mother consented to move
The appeals court agreed with the primary judge that under the deed of family arrangement, the accommodation was required to be located in Orange.
However, the primary judge also found that although the deed required the house to be located in Orange, through her conduct, Ms Richardson had promised the Lindsays that it was acceptable for them to move from the house in Orange to the new house in Lewis Ponds.
She also indicated that she would not require repayment of her $220,000 gift if they moved.
Daughter and son-in-law’s evidence preferred to mother’s evidence
In coming to this conclusion, the primary judge preferred Mr and Mrs Lindsay’s evidence to that of Ms Richardson.
The Lindsays’ evidence included that although Ms Richardson had travelled with her daughter and son-in-law to see the Lewis Ponds property three times before it was purchased, she never voiced any objections to moving to the new house.
The primary judge also accepted the son-in-law’s evidence that Ms Richardson had told him she wanted the purchase of the Lewis Ponds property to proceed and that she understood that if it did, her daughter and son-in-law would not be able to return her money.
Mr and Mrs Lindsay had other witnesses who testified that Ms Richardson was looking forward to the move and was excited about it.
The primary judge also concluded that Ms Richardson’s bullying claims were greatly exaggerated.
Mother estopped (restrained) from going back on consent
The primary judge accepted that the Lindsays had relied on Ms Richardson’s promise, taking on a larger mortgage and buying the new house.
The primary judge concluded that it would be detrimental to Mr and Mrs Lindsay, as well as unconscionable, to allow Ms Richardson to break her promise and insist on the return of her money.
Accordingly, Ms Richardson was estopped, or restrained, from breaking her promise.
Appeals Court rejects argument that primary judge erred in finding estoppel
On appeal, Ms Richardson said that the primary judge had erred in finding that she was estopped.
She contended that contrary to the primary judge’s finding, she had never said to her son-in-law that she did not require the return of her life savings.
However, the appeals court found that she had not identified in her arguments why the court should overturn the primary judge’s acceptance of Mr Lindsay’s evidence on this point.
The appeals court also stated that Ms Richardson had not challenged the primary judge’s finding that her conduct more generally had manifested her consent to the proposed move. Had she made such a challenge, the court said it would inevitably have failed.
The court found that Ms Richardson had not identified any matters that would cause the court to overturn the primary judge’s finding that the Lindsays had relied on Ms Richardson’s promise of consent.
The court also rejected Ms Richardson’s argument that the primary judge was wrong in finding that Mr and Mrs Lindsay had suffered detriment in reliance on her promise.
Appeals court dismisses mother’s argument that estoppel has exceedingly harsh impact
On appeal Ms Richardson also argued that holding her bound by an estoppel would have an exceedingly harsh impact on her and would deliver a windfall benefit to her daughter and son-in-law.
The harsh impact on her would include loss of “her whole life savings” and loss of “accommodation and caring services”, due to the breakdown in her relationship with her daughter and son-in-law.
The windfall benefit to her daughter and son-in-law would include retaining the $220,000, the increased value of the Orange and Lewis Ponds properties and the additional benefit of not having to provide any of the caring and accommodation services required under the deed.
The court found that this position was based on a misunderstanding that the operation of the deed had come to an end.
In fact, the obligations of the daughter and son-in-law to continue to provide care and accommodation remained in effect.
Further, these were of considerable value to the mother and may in future end up costing the daughter and son-in-law more than the $220,000 they received.
Important to ensure written agreement addresses change in circumstances
This case highlights that when entering into a written agreement, it is important to ensure that it is carefully drafted to cover the parties’ rights and obligations should circumstances change.
In reviewing the deed in this case, the primary judge commented:
Perhaps if Ms Richardson and the Lindsays had been more prescriptive in the deed as to what would happen if one of the parties wanted to move out of town, the family might not have ended up in the unfortunate position of going to court to resolve this disagreement.
For more information about deeds of family arrangement, please see Deed of family arrangement could protect your estate after de facto separation.